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A sting in the tail: the latest instalment from the Crociani litigation

Although the substantive judgment in the Crociani litigation was handed down on 11 September last year, that vine still had some fruit to bear. In particular, two of the inquiries ordered by that judgment have now been decided in a subsequent judgment, which is the subject matter of this note. This subsequent judgment is particularly illuminative of the approach taken by the Royal Court when assessing liability of trustees for the loss of growth in the value of trust assets that were paid away in breach of trust.

Background

The Crociani litigation is relatively complex and has yielded useful judicial commentary on a number of issues, ranging from electronic discovery to the interpretation of forum and jurisdiction clauses. But for the present purposes, the history can be summarised as follows:

the Grand Trust was established by the settlor, Edoarda Crociani, principally for the benefit of her two daughters;

the Grand Trust was, during the relevant period, a Jersey law trust;

in 2010, the then-trustee, at the instigation of the settlor, made an appointment from the trust to another trust;

this appointment extended to an investment portfolio of significant value together with the benefit of certain loans;

one of the two daughters, Cristiana Crociani, successfully established that the appointment was an improper attempt to deprive her of potential benefit from the appointed assets; and

as a result, the substantive judgment in 2017 ordered the then-trustee and the settlor to restore the trust fund (or rather, a sub-trust established for Cristiana’s benefit) commensurate with the value of the appointed assets.